$3.5 Million Over The Original Budget Is A Savings? Really?

I incorrectly reported that the Special School Board Meeting would be held on Tuesday. I should have paid more attention to my email, it was held Monday morning at 9am. I apologize for any inconvenience this may have caused and I hoped no one showed up Tuesday based on my bad information. 

I had planned to attend and find out what the latest total Guaranteed Maximum Price (GMP) for the sports complex was but since the meeting was held at 9am, I would not have been able to attend anyways.

 

I listened to the recorded minutes so you don't have to.

 

The main issue for the "Special" Board meeting was a request by Bogh Engineering, the general contractor for the high school sports complex, for an additional half million dollars to complete a pedestrian foot bridge.
 
During the discussion on this item, Mrs. Poulter expressed her main concern was that a GMP had been given to the district by the contractor without being fully informed and Mr. Orozco argued he didn't believe more Measure Z money should be used for a job he thought was already included in the GMP. 
Mrs. De Longchamp argued on behalf of Bogh Engineering, her brother's employer. 
Following is the selective history presented by Mrs. De Longchamp and Mr. Hackney:
  • The bridge was "originally" supposed to cost about $1.8 million.
  • The bridge was "valued engineered" (costs cut) down to about $533,000 
  • The lower cost plan called for a concrete bridge.
  • The plan sent to the DSA (The Division of the State Architect) by "our" architect called for steel and concrete. - It wasn't clear if our architect took it upon themselves to submit plans different than what the district had authorized Bogh to build or if this was the result of a directive from the state, it would be nice to know.
  • The DSA sent back approved plans for a steel bridge with some concrete.
The change order was approved 3-2 with Orozco and Poulter voting against approval. And the board never officially declared a new total GMP but from the discussion it appears to be about $15.5 million.
Now, with the new change order, the total for the footbridge will "only" be about $1.2 million. Since "originally" the cost was supposed to be $1.8 million, Board President Lara, De Longchamp, and Hackney believe they saved us almost $600,000.

Here’s  the history I remember and reported on:

 When Measure Z passed, most voters, myself included, weren’t aware the district was planning to use a large portion of the funds to build a multi-million dollar sports complex. We believed issues such as traffic safety around our schools and updating computers for our high school technology department would be addressed.

In 2009, we were told the district was planning a $12 million project. I argued then that the high school needed a new stadium but I believed the scope of the complex project could be scaled back to $8 million. I also asked the board to consider reducing the scope of the Taj Mahal (the new district offices).

The board first officially approved a $15.8 million plan and sent the contract out for bid. After a bidding process and a questionable decision by the board, all the district's construction contracts were awarded to Bogh. Click here to read my February 9, 2010 post on this subject.

Eleven months after Bogh Engineering was awarded the contracts, the district revealed the “Contractor(‘s) Estimated Budget” for the complex was $27.9 million, $12 million over budget. According to the contractor's estimated budget, all four Bogh projects were a total of $20 million over the amount of the "winning" bids. With the exception of the Taj Mahal, all the projects were sent to committees for "value engineering". The Taj Mahal was "value engineered" by the administration. Large cuts were made to the projects. However, the Taj Mahal looks like it will end up closer to Bogh's estimated budget than the 3 projects sent to committee, no surprise there. Click here to read my January 19, 2011 post on this subject.

After changes were approved, the board accepted a Guaranteed Maximum Price from Bogh for about $15 million. In this week’s special board meeting, while approving a half million dollar increase to Bogh’s GMP, board members Lara, De Longchamp, and Hackney referred to the inflated “Contractor Estimated Budget”  and argued they “saved" us $600,000 on the pedestrian foot bridge alone. If I employ their logic, by my calculations, the sports complex project has already cost $3.5 million (and counting) more than the board’s original plan. So the board hasn't really "saved" us anything.

It’s no surprise today to hear our politicians and government agencies refer to penalties and revenues as taxes; or reductions in planned spending growth as expenditure cuts; or increases in spending as investment. This is why I’m not surprised to hear three board members use an inflated cost estimate  to claim that a $3.5 million increase in a project’s initial plan is a savings.